Finding a Lead Investor
Getting funded is often more art than science. Some companies can and do get funded within hours, though contrary to what you might think, this is certainly more exception than rule, especially in the early stages. However, there is one factor that can significantly aid you in raising your round.
Finding a Lead Investor
Your lead investor is the individual or group that is managing and taking responsibility for organizing an investment round in your company. The key to finding your lead sooner rather than later is building relationships with investors early.
Even before you raise your round, you should be meeting with potential investors. In addition to potentially speeding up the investment cycle, it puts you in a better position to determine which investors understand your vision and will truly add value to your business. You’ll also get a sense of how easy or difficult they are to work with, and what other investor relationships they have. Ultimately, your lead investor’s relationships with other investors will play a big part in your raise.
Putting Together a Syndicate Becomes That Much Easier
When you’re first raising capital in your seed and Series A rounds, a number of different investors may be interested in you for different reasons. They may want to diversify their portfolios or have built an investment thesis around the problem or space you’re trying to address. They may even have industry expertise in your market. They may a whole other host of reasons. The bottom line is that bringing together multiple investors around your raise, or building a syndicate, will allow you to raise a larger round, build more strategic relationships, and demonstrate your strong position in the market.
Want more resources like this? Subscribe to the HPA newsletter!
You’re usually finding a deal lead and putting together a syndicate at the same time. Once again, having built meaningful relationships with investors beforehand will help speed up your investment cycle timeline.
Having a deal lead and term sheet will also help you move through your raise more quickly. By virtue of having another investor committed and doing the heavy-lifting, you validate your business and show other investors that closing the deal will be less work for them. Moreover, a well-connected deal lead will leverage existing relationships to bring others in, reducing the time you spend looking for and closing new investors for the syndicate. These relationships will also come in handy when you’re building strategic partnerships.
Once you secure your lead and your syndicate, you’ll close your round. But that doesn’t mean you’re done. In addition to building a strong business with the capital you raised, you also need to be preparing for your next raise. That means building more investor relationships, monitoring your metrics, and practicing everything from your pitch to explaining your numbers.
This post is part of the Hyde Park Angels Entrepreneurial Education Series, which brings together successful, influential entrepreneurs and investors to teach entrepreneurs everything they need to know about early-stage investment through events, articles, videos, and more. If you are interested in learning more about raising a round, register for “Early Stage Investment 101” on June 17.
Get more articles like this when you subscribe to our newsletter.
About Hyde Park Angels
Hyde Park Angels is the largest and most active angel group in the Midwest. With a membership of over 100 successful entrepreneurs, executives, and venture capitalists, the organization prides itself on providing critical strategic expertise to entrepreneurs and the entrepreneurial community. By leveraging the members’ deep and broad knowledge of multiple industries and financial capital, Hyde Park Angels has driven multiple exits and invested millions of dollars in over 40 portfolio companies that have created over 850 jobs in the Midwest since 2006.
About the Author
Alida Miranda-Wolff
Alida Miranda-Wolff is Associate Manager at Hyde Park Angels. Her role includes creating and executing marketing and communications strategies, planning and managing events, fostering and maintaining community and industry partnerships, and managing membership. Prior to joining Hyde Park Angels, Alida served as a manager, data analyst, and publication specialist at a multibillion dollar industrial supply corporation. She has led one of the most successful Kickstarter campaigns in Chicago history and worked with half a dozen startups in various marketing, content creation, and project management roles. Alida believes in creating valuable, spreadable multimedia content, and has done so as a freelance writer for several print and online publications.
